Tag: Tenants

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Plans to force buy-to-let owners to pay up to £10,000 to boost energy efficiency

buy to let
  • Campaigners are calling for plans to charge landlords up to £10k to be scrapped 
  • Plans are for all new rental homes to have an energy rating of C or above 

Campaigners are urging the Government to scrap proposals to make landlords pay up to £10,000 to improve the energy efficiency of their rental homes.

The National Residential Landlords Association suggested that landlords could not reasonably be expected to pick up the tab in the way that the Government is suggesting for stringent new rules affecting buy-to-let properties.

In an official statement, NRLA said that the plans were based on the ‘misguided assumption that all landlords are property tycoons with deep pockets’.

In a consultation that closed in January, the Government proposed that from 2025 where a new tenancy agreement is signed, the property will need to have an Energy Performance Certificate rating of C or above.

From 2028, all rental properties will need to meet the new standard, even where it is not a new tenancy agreement.

The Government has suggested that, in meeting these targets, landlords should be expected to pay up to £10,000 to make the necessary improvements.

However, the NRLA said that this imposed cap fails to accept the realities of different property and rental values across the country.

It follows research from NRLA that showed private landlords making an average net income from property of less than £4,500 a year. (Scroll down for more information about how this figure was calculated.)

The National Residential Landlords Association is calling on the amount that landlords should be expected to contribute to be linked to average market rents in any given area – known as broad rental market areas – as calculated by the Valuation Office Agency.

Under the NRLA’s proposals, this would mean the amount a landlord would need to contribute would gradually taper from £5,000 to £10,000, taking into account different rental values – and by implication, property values – across the country.

VAT and council tax reductions

Alongside this, the NRLA is calling for a package of fiscal measures to support property investment.

It said these should include the development of a decarbonisation tax allowance, where VAT would no longer apply to energy efficiency and low carbon work.

And it said council tax should not be charged where energy improvements are being made to rental properties when they are empty.

Ben Beadle, of the National Residential Landlords Association, said: ‘We all want to see as many energy efficient rental properties in the sector as possible.

‘Besides being good for tenants, improvements made to rental properties ensure they become more attractive to prospective tenants when being marketed by landlords and agents.’

However, he added: ‘The Government’s proposals for the sector are not good enough.

‘They rely on a misguided assumption that landlords have unlimited sums of money and fail to accept the realities of different property and rental values across the country.

‘Ministers need a smarter approach with a proper financial package if they are to ensure their ambitious objectives are to be met.’

David Reed, of Richmond estate agents Antony Roberts, said: ‘We all want to see improvements to energy efficiency but If these proposals come to fruition, there’ll be a rush of landlords with property in vast swathes of suburbs – where older, less efficient properties make up a greater proportion of the stock – selling rather than incurring what could be considerable costs in retaining an investment in property.

‘With yields so low, returns barely meet costs as they are, especially as the latter have grown significantly in recent years either directly (Tenant Fees Act and electrical regulations) or indirectly (unable to offset mortgage interest).

‘Tenants love charming period conversion flats in good commuter territory and seldom is efficiency/an EPC rating at the forefront of the search criteria, whereas location and provision of attractive accommodation win hands down. There are simply not enough newer, in theory more efficient, properties being constructed to meet tenant demand.

‘The private rental sector vitally needs a healthy supply of good property and landlords who own one or maybe two rental properties make up a large sector of the market. Many are already disgruntled by recent changes and longer-term plans are under question. If they leave, the effect on tenants will be hard felt – a further restriction of supply giving more upward pressure on rental and lack of choice.

‘Hopefully consideration will be given to where there is no easy-fix or realistic programme of improvement to achieve grade C status or better.’

How much do landlords make?

Private landlords make an average net income from property of less than £4,500 a year, according to the The National Residential Landlords Association.

Here is how the NRLA reached that figure… 

The English Private Landlord survey said that the average – median – gross rental income for a landlord before tax and other deductions is £15,000.

 Average costs for landlords would be:

– Repair and replacement of furnishings – based on the previous tax exemption for 10% of annual rent (£1,500)

– Cost of a gas safety certificate (average £80 required annually – checkatrade average)

– Electrical safety check (average £265 performed every 5 years. £53 annually – checkatrade average)

– Deposit protection (£13 from TDS)

– Tenant referencing cost (for two tenants £49 NRLA tenant referencing)

– Interest-only mortgage for the average UK property (£250,000) with a 20% deposit (cheapest available £6,096 annual)

– Insurance (£531.15 for building and contents insurance from Hamilton Fraser using average floor space for PRS property https://www.statista.com/statistics/292206/average-floor-area-size-of-dwellings-in-england-by-tenure/)

– Agency fees (£1200 based on 8% agency fees)

The NRLA based its calculation on an average landlord of a house let to a couple with an interest-only mortgage, and assumed that tenants move annually.

Total gross rental income – £15,000

Repair and replacement costs – £1,500

Tenancy management costs – £726.15 (includes average cost of insurance, gas safety certificates, 1/5 of the EICR cost, deposit protection and tenant referencing)

Agency fees – £1,200

Total deductions before tax and mortgage costs – £11,573.85

Amount that can be taxed – £2,314.77 (£11,573.85 x 0.20)

Tax after mortgage interest relief accounted for – £1,095.57 (£2,314.77 – (£6,096.00 mortgage costs x 0.20)

Remaining balance after Tax – £10,478.28 (£11,573.85 – £1,095.57)

Mortgage costs – £6,096.00 (based on cheapest available 80% Loan to Value mortgage on the average property in the UK of £250,000)

Remaining balance after all average costs deducted – £4,382.28 (£10,478.28 – £6,096.00)

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House price gap between sellers and buyers reduces

Unmanaged vacant properties may invalidate insurance - claim

Leading lettings and sales agent, Benham and Reeves, has released the latest of its very own quarterly house price index based on data from the top four existing indices, looking at where the average house price sits and how the gap between buyer and seller expectation and actual sales has changed.

The Benham and Reeves House Price Index combines data from the four leading industry indices to give a singular figure of how the UK market is moving based on both buyer and seller sentiment, as well as looking at the difference in these indices and what they reveal about the state of the current market.

Current property values

The latest index from Benham and Reeves for Q4 2019 shows that the current overall average UK house price is sitting at £251,912 having dropped marginally by -0.2% on the previous quarter, although prices were up by 1.4% on an annual basis.

In London, the average property value also dropped marginally to £511,166, down -0.4% on the previous quarter, down -0.7% on an annual basis.

Seller and buyer expectations show signs of alignment 

The latest quarterly data from Nationwide and Halifax shows that the amount UK buyers are committing to borrowing has increased slightly by 0.31% to £225,188. At the same time, the average asking price has fallen by -1.02%, while sold prices are up 0.4% to £234,167.

Despite a market bounce following the election, it’s clear that months of Brexit uncertainty have seen the expectation gap between buyers and sellers close. The gap between buyer expectation and asking prices dropped -1% in Q4 to 35%, while there was also a -1% decrease between asking price and sold price, down to -23%.

However, in London, this gap remained consistent with a 33% increase between the price at which buyers were being approved for a mortgage and the asking price expectations of UK sellers, while there was a -22% drop between this asking price and the average sold price.

Director of Benham and Reeves, Marc von Grundherr, commented: 

“It’s only natural that asking prices will remain at a higher level than the average mortgage approval or sold price, but it’s interesting to see that months of Brexit uncertainty had started to bring this difference in buyer and seller expectations closer together.

As buyers committed to slightly more in the way of a mortgage approval price to take advantage of lower market values and lower interest rates, sellers realised they had to lower asking expectations to secure a deal in tough market conditions. This also translated to a smaller gap between asking price and the sold price accepted.

However, with a huge spike in activity following December’s election, we will no doubt see asking prices start to lift once again, as UK sellers look to take advantage of returning buyer demand.

While this asking price expectation will always be higher than the reality of the average sold price, an optimistic increase in a stronger market places sellers in a better position to negotiate a stronger sale price before accepting an offer.”

Benham and Reeves House Price Index
UK
Year
Quarter
Average House Price
Quarterly Change
Annual Change
2018
Q1
£245,074
–
Q2
£248,245
1.3%
Q3
£250,244
0.8%
Q4
£248,513
-0.7%
2019
Q1
£247,463
-0.4%
1.0%
Q2
£251,682
1.7%
1.4%
Q3
£252,487
0.3%
0.9%
Q4
£251,912
-0.2%
1.4%
London
Year
Quarter
Average House Price
Quarterly Change
Annual Change
2018
Q1
£519,238
–
Q2
£520,412
0.2%
Q3
£517,059
-0.6%
Q4
£514,976
-0.4%
2019
Q1
£504,731
-2.0%
-2.8%
Q2
£512,193
1.5%
-1.6%
Q3
£513,180
0.2%
-0.8%
Q4
£511,166
-0.4%
-0.7%
UK
Year
Quarter
Mortgage Approvals Price
< Difference >
Asking Price
< Difference >
Sold Price
2018
Q1
£218,231
37.8%
£300,684
-25.4%
£224,319
2018
Q2
£219,116
40.4%
£307,745
-26.3%
£226,869
2018
Q3
£221,959
37.4%
£305,060
-24.1%
£231,438
2018
Q4
£220,522
37.1%
£302,239
-23.8%
£230,274
2019
Q1
£221,578
35.6%
£300,481
-24.3%
£227,608
2019
Q2
£225,987
36.2%
£307,691
-25.5%
£229,276
2019
Q3
£224,490
36.5%
£306,321
-23.6%
£234,074
2019
Q4
£225,188
34.6%
£303,182
-22.8%
£234,167
London
Year
Quarter
Mortgage Approvals Price
< Difference >
Asking Price
< Difference >
Sold Price
2018
Q1
£473,776
30.8%
£619,905
-23.1%
£476,653
2018
Q2
£468,845
34.0%
£628,174
-23.8%
£478,555
2018
Q3
£468,544
31.2%
£614,537
-21.9%
£480,090
2018
Q4
£466,988
31.5%
£614,044
-22.4%
£476,273
2019
Q1
£455,594
32.8%
£605,178
-22.9%
£466,356
2019
Q2
£465,722
32.7%
£618,232
-24.5%
£466,683
2019
Q3
£460,686
33.1%
£612,967
-21.9%
£478,594
2019
Q4
£458,363
32.9%
£609,315
-21.5%
£478,227
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Useful guidance and support for dealing with tenants during Covid-19 outbreak

Useful guidance and support for dealing with tenants during Covid-19 outbreak

A high number of buy-to-let landlords are concerned about the impact of the Coronavirus, but The Guild of Letting and Management has provided some practical guidance and advice to help you cope with the existing situation.

One of the most common questions many landlords are currently asking about is the announcement the government made on the 18th March 2020, relating to evictions and support for those renting, although it is important to point out that the new legislation has not yet been released.

A key topic on the Guild’s advice line is Rent. It is important to note, that not every single tenant in the UK has been made redundant, or is experiencing difficulty, therefore, it is important to ensure that this is dealt with on a case by case basis.

Points to consider:

1. Ensure the tenant is aware that rent is still due.

2. If the tenant is experiencing difficulty, guide them to the Department of Work & Pensions website where they can obtain the guidance they require regarding pay, statutory sick pay (SSP) and other relevant up to date information.

3. Ask tenants to put their concerns to you in writing. It is important that you are able to discuss the matter with all the relevant facts to hand.

4. Speak to your lender and find out what they are putting in place. Some landlords have already offered tenants a discount on rent or a “rent holiday”. But remember, that as with the mortgage lenders, this deferred rent will have to be paid back at some point in the future.

5. Speak to the guarantor, where there is one. They should not be left out of any discussions regarding rent payments.

6. Check whether your insurer can offer rent and legal protection.

7. Keep records up to date. Every discussion, conversation over the phone, email, must be logged and documented.

8. Any pre-existing arrears (pre-18th March 2020) cannot be factored into this Coronavirus situation. Remember everyone is in the same boat. No one has experienced this before, This is not the same as the 2008 recession, this is a public health matter, so it is difficult for everyone involved on so many levels.

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Coronavirus could cost BTL landlords almost £15bn in lost rental income

Coronavirus could cost BTL landlords almost £15bn in lost rental income

The devastating impact of the Coronavirus could cost buy-to-let landlords nearly £14.9bn should tenants be unable to pay rent during the three month support period announced by the government last week, new research shows.

The government has announced that they will suspend new evictions and halt new possessions proceedings to the court in light of the COVID-19 pandemic.

If tenants are unable to pay their rent, Ome calculates that this would leave landlords £14.9bn out of pocket over a three-month period.

The deposit replacement scheme’s findings are based on the fact that there are 5.2m households currently within the private rental sector alone and without the ability to work and pay their rent, the buy to let sector could see a loss of £4.97bn every month based on the average monthly rent of £955 alone.

Nationally, this lost income is highest in England with potentially £11.6bn lost in rental income, while London is home to the biggest sum regionally with a potential £4.9bn lost in three months alone.

There are some 2.6m landlords operating within the UK buy to let sector meaning the average landlord has a portfolio of two rental properties. With an average rent of £955 and a loss of three months’ rental revenue across both properties, they could be facing an individual £5,730 shortfall in rental income.

With a ratio of 2.1 properties per landlord in Scotland, the loss is at its greatest at £6,146 over three months with Northern Ireland also high at £6,083.

Co-founder of Ome, Matthew Hooker, commented: “It’s great news that the government are providing some financial respite for the nation’s landlords, however, it’s more of a weekend away than a holiday and once expired, UK landlords are still facing the cost of a buy to let mortgage without the rental income to pay it.

“It’s by no means the fault of the tenant if they are unable to pay but there is a very real chance that landlords will turn to the rental deposits at the end of a tenancy in order to recoup this lost rent. While this would be unfair on a tenant who has otherwise kept the property in good order, it may well be the case that landlords are simply left with no choice.

“The silver lining at least is that hopefully, not all tenants will be unable to pay their rent and so this sum of lost rental income should reduce, but whichever way you look at it, the UK rental sector is in for a tough few months.”

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Landlords switching from short-term lets to longer lets before lockdown

Landlords switching from short-term lets to longer lets before lockdown

There has been a significant increase in the number of landlords and homeowners switching from short-term lets to longer rentals.

Across the UK there has been a 20% drop in people looking for rooms over the last week due primarily to the COVID-19 outbreak, according to SpareRoom.

With a possible countrywide lock down rapidly approaching, the flatsharing website reports that people with rooms to rent are understandably keen to find tenants.

SpareRoom has seen a 15% increase in adverts from agents and a 12% uplift from landlords, just in the past two days. This is driven, in part, by landlords and homeowners switching from using short-term rental sites like Airbnb as tourism tanks and looking for longer term rents for their rooms.

With supply in some parts of the country currently outstripping demand, 18% of agents have reduced their asking rents in the past two weeks, while 11% of landlords have done the same, with some directly mentioning COVID-19 as the reason for this reduction.

With the growing concern about face to face contact SpareRoom has also seen a real trend over the last week of people moving towards video calls – getting to know each other and having a first view of the property this way.

Matt Hutchinson, SpareRoom director, said: “Whenever there’s uncertainty people put off making big decisions, like moving house. We saw it during the confusion over Brexit and we’re seeing it in a much more marked way now. In contrast, people with rooms to fill are desperately hoping to get new tenants in before the country goes into lockdown.

“Although it’s still early days, we’re also seeing some interesting shifts in behaviour on both sides. Following widespread cancellations, we’re seeing both landlords and homeowners moving from short term rents to looking for longer term security.

“Tenants are getting creative by using video calls to hold virtual viewings and interviews. The people you live with make a far bigger difference to you than the property itself, and video calls are a great way to get that all important first impression before deciding to go and see a property. It also minimises the need for travel and social contact so it’s a win-win.”

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Paws for thought: ‘no pet’ clauses contributing to loneliness

Paws for thought: ‘no pet’ clauses contributing to loneliness

Two-thirds of private renters who would like to own a pet are being forced to delay by restrictive tenancy agreements, and this is contributing to the UK’s loneliness epidemic, according to new research by YouGov and Mars Petcare.

The study found that private renters believe owning a pet would improve their lives, with four in five – 82% – of those who wish to own a pet of the opinion that it would benefit their mental well-being.

Meanwhile, 75% said it would benefit their physical health and 76% said it would make them feel less lonely. 61% of women said it would make them feel safer in their homes.

In addition, one in ten private renters surveyed said they had moved or given up a pet because of their pet being unwelcome.

The findings of the research suggest that some landlords are missing out on an additional pool of tenants.

Just 43% of private renters surveyed said their landlord offered a pet-friendly rental policy, while just over half of residendents – 53% – said they would be likely to consider a longer tenancy if their landlord allowed pets.

Some 10% of private renters said they had moved home or given up a pet as a result of restrictive tenancy agreements.

The Tenant Fees Act introduced in June 2019 has seen some pet owners paying increasingly high rents as landlords are banned from requesting pet-specific deposits. Yet, just 22% of private renters said they would welcome paying a higher rent to own a pet, with 53% instead favouring a pet-specific deposit on top of their regular deposit, while half – 50% – of those surveyed would be happy to pay for additional cleaning services.

Mars Petcare is now calling on the government to do more to guarantee the rights of private renters to own pets so that more people are able to reap the benefits.

Helen Warren-Piper, general manager at Mars Petcare UK, commented: “At Mars Petcare we have always known that pets make the world a better place, which is why we have made it our mission to create a world where they are healthy, happy, and welcome.

“Our recent survey shows that many private renters would love to own a pet, but are unable to because of unfavourable tenancy laws.

“We therefore believe that changing the rights of private tenants with respect to pet ownership, is an important step to creating that world. That’s why we are calling on the UK government to work with landlords and tenants to find an improved way forward so that more people are able to enjoy the benefits of responsible pet ownership.”

Georgie Laming, campaigns manager at Generation Rent, said: “Pets are a large part of making a house a home and whatever your tenure you should be able to keep a pet. Tenants with pets are more likely to want a stable, long term home, which benefits landlords in the long run. Whilst we welcome the Secretary of State’s commitment to updating the model tenancy agreement to make renting fairer for pet owners it’s clear that further measures are needed to guarantee the rights of renters to own pets.”

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Property market sentiment improves following Tory election victory

Property market sentiment improves following Tory election victory

The housing market has enjoyed what some are calling a “Boris bounce” following the result of last month’s general election, with confidence in the market hitting a three-year high, according to a new survey.

Zoopla, in partnership with MonkeySeed, surveyed 6,000 people, and over 650 agents from the sales and lettings landscape across the UK, and found that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome.

Estate agent confidence levels are up, with more than half – 55% – of those surveyed reporting that they feel either ‘very confident’ or ‘somewhat confident’ in the strength of the market during the next year. This follows a three-year consecutive decline in agent confidence.

From a regional perspective, agents in the north are registering the highest levels of confidence in market performance for 2020 at 57%; meanwhile, agents in the south come in at 53% and demonstrate the highest turnaround in sentiment, up from 46% recorded 12 months prior.

Some 52% of agents expect to see an increase in the supply of stock coming onto the market over the next 12-18 months to start meeting buyer and renter demand.

Additionally, 45% of agents believe that there will be an increase in the number of property transactions that take place across the year ahead, in a further sign of renewed market health.

The economic and political landscape, as well as current stock levels, were cited as immediate market challenges; however, the subsequent election outcome is already starting to reshape market dynamics.

Andy Marshall, chief commercial officer at Zoopla, said: “It comes as little surprise that the so-called ‘Boris Bounce’ has already started to reshape the market in the immediate term – particularly amidst reports of improving consumer confidence following the decisive election outcome.

“Without doubt, appetite to buy and sell property has been pent up since the aftermath of the Brexit vote in 2016, and it would now appear that we have the green shoots of a new cycle in the market.

“While we don’t expect runaway prices – indeed we have forecast a modest 3% growth for 2020 – we are definitely heading in the right direction and agents are rightly benefitting from what we hope will become a new dawn.”

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Most in demand areas in the UK to rent a property

Most in demand areas in the UK to rent a property

Fresh figures from Howsy has revealed the most in-demand cities to rent property in the United Kingdom, with some surprising findings.

The rental management platform analysed demand across 23 major UK cities as well as each borough of London, based on the proportion of rental listings that had already been snapped up by renters as a percentage of all listings available online.

The study found when it comes to existing demand, Newport is home to the highest level of tenant demand with 35% of all rental homes listed on the major portals already let.

Other highly ranked in-demand cities for rental properties include Bristol at 34%, Nottingham (33%), Cambridge (33%) and Belfast (25%).

Elsewhere, Plymouth (23%), Portsmouth (23%), Bournemouth (23%), Leicester (18%) and Manchester (18%) complete the top 10.

Aberdeen remains the least sought after area for rental properties in the UK with tenant demand at 5% followed by Swansea (8%) and Leeds (9%).

In London, Bexley, Bromley, Sutton and Lewisham are the hottest boroughs for tenants straight off the bat in 2020, with 38% of all rental stock listed online already being snapped up.

Merton (32%), Croydon (31%), Greenwich (30%), Haringey (29%), Enfield (29%) and Kingston (27%) are also amongst the most popular.

The high financial barrier of rental costs is evident at the top end of the ladder with Kensington and Chelsea (7%), Westminster (7%), Camden (11%), the City of London (12%) and Hammersmith and Fulham (13%) all ranking with the lowest number of properties let as a percentage of total properties listed.

Calum Brannan, founder and CEO of Howsy, said: “The buy-to-let sector may have had a rough ride of late but the UK rental market is still heavily relied upon by many in order to put a roof over their head and as a result, many cities still provide a great opportunity for buy-to-let investors due to the lower levels of available stock and consistently high tenant demand.

“When looking to invest, this combination of high demand, an affordable initial cost and a good rental yield should all be considered in order to maximise a return. For those that do their research and tick these boxes, bricks and mortar remains a very sound investment despite attempts to dampen the financial return via stamp duty hikes and changes to tax relief.

“Hopefully, a newly refreshed Government will realise that the buy-to-let landlord is the backbone of the UK rental market and we need to encourage investment into the sector rather than deter it.”

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New regulations to combat carbon monoxide poisoning

New regulations to combat carbon monoxide poisoning

An assembly member has welcomed the introduction of legislation for carbon monoxide detectors in rented homes in Wales.

The Welsh Government says new regulations are to be introduced to tackle the threat of carbon monoxide poisoning.

Around 60 people a year are killed by carbon monoxide poisoning in Wales and thousands are hospitalised.

The regulations will require landlords in Wales and their agents to install working carbon monoxide alarms, smoke alarms and undertake an electrical safety test at least every five years.

The time frame is not clear at this stage, but it would appear that it will be implemented as part of the introduction of Section 91 of the Renting Homes (Wales) Act 2016 and prior to the end of this Assembly term in 2021.

Clwyd West AM Darren Millar previously expressed concerns to the Senedd over the absence of legal requirements for the detectors to be installed in rental properties.

But he has welcomed confirmation that a new section of the Renting Homes (Wales) Act 2016 will include additional requirements for landlords to install working carbon monoxide alarms, smoke alarms and undertake an electrical safety test at least every five years.

He said: “I’m absolutely delighted to hear that new regulations will be coming into force to ensure landlords install carbon monoxide testers in their properties and the Minister is committed to ensuring they are implemented by the end of this Assembly term.”

Many people are at risk of carbon monoxide poisoning, particularly if they do not have a CO alarm in their property.

In the short-term, carbon monoxide poisoning can cause dizziness, sickness, tiredness and stomach pain, while prolonged exposure can lead to loss of consciousness and have a significant impact on an individual’s mental state, coordination and heart health.

Carbon monoxide is a poisonous gas that is produced when fuel does not burn properly – usually from badly fitted or poorly maintained appliances.

Though carbon monoxide is a poisonous gas, it has no smell or taste, so it is not obvious when someone has been exposed to it. Just breathing it in can make somebody very unwell and it can kill if a person is exposed to high levels.

Millar added: Carbon monoxide is a toxic gas, but, being colourless, odourless, tasteless, and initially non-irritating, it is very difficult for people to detect.

“Unfortunately, many people across Wales still do not know enough about its dangers and it continues to claim lives or leave people with long-term chronic health problems.

“Currently 60 people a year are killed by carbon monoxide poisoning and thousands are hospitalised. Hopefully, these new regulations will help to reduce that figure.”

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Rental supply shortage set to push up rents

Rental supply shortage set to push up rents Rents look set to rise over the next 12 months as the supply of new rental properties dries up, according to the latest survey by the Royal Institution of Chartered Surveyors (RICS).

It said small scale landlords are pulling out of the market due to recent tax and legislative changes which have made buy-to-let investments less profitable.

Landlord instructions remain in decline, with this indicator having been stuck in negative territory since 2016.

Going forward, rents are expected to increase as a consequence of the imbalance between rising demand and falling supply.

In the sales market, activity levels are benefiting from greater political certainty following the outcome of last month’s general election.

There has been a notable increase in residential property sales and this trend is likely to continue for the foreseeable future.

The December 2019 RICS Residential Market Survey shows that sales expectations have increased significantly, with a number of other key activity metrics turning positive for the first time in several months.

Sales expectations for the next 12 months have increased to a net balance of +66%, up from +35% in November, following a sharp rise in enquiries from potential buyers.

This change in activity levels is expected to lead to property price growth in the near and longer-term due to continued imbalance in supply.

In December, 17% more survey respondents saw a rise rather than fall in enquiries from new buyers, up from -5% in November, at the headline level across the UK.

Regionally, the majority of areas saw growth in interest from new buyers, with respondents in Wales and the North East in particular reporting solid growth.

Enquiries also rose in London and the South East, marking a noticeable turnaround from the negative results in November.

Aside from a rise in enquiries from buyers, the number of agreed sales edged up at the national level to +9% net balance. This is the first time since May 2019 that the number of agreed sales has shown a positive result.

Agreed sales in London and East Anglia delivered amongst the strongest improvement in sentiment, with net balances of +22% and +23% respectively, while sales reportedly weakened in Northern Ireland and Scotland.

Sales expectations for the next three months are also positive, for the third month running, with +31% of respondents anticipating transactions will increase.

This sentiment is mirrored for sales prospects over the 12 twelve months, which have seen an even greater improvement.

A net balance of +66% of survey participants forecast that sales will rise in the year ahead, up from +35% previously. The strongest net balances were returned in Wales and the South West, although all regions are showing strong improvement.

Simon Rubinsohn, RICS chief economist, commented: “The signals from the latest RICS survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome.

“Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal.

“However, the sales expectations indicators clearly point to the prospect of more upbeat trend in transactions emerging with potential purchasers being more comfortable in following through on initial enquiries.”

While new instructions picked up at the national level, a net balance of +9% of contributors reported an increase, outside London and the South East, new sales instructions were more or less flat rather than picking up to any degree.

With regards to house prices, the survey’s headline net balance came in at -2%, compared to -11% previously, signalling a broadly flat national trend for the time being.

Going forward, however, near term price expectations were revised higher in all parts of the UK. This indicates a large shift across previously weakening areas, such as London and the South East.

Back at the national level, a net balance of +61% of survey participants see prices increasing at the twelve month horizon (a rise from +33% last time). What’s more, the outlook for house price inflation was adjusted higher right across the UK.

Rubinsohn added: “The ongoing lack of stock on the market remains a potential drag on a meaningful uplift in activity although the very modest increase in new instructions in December is an early hopeful sign.

“Given that affordability remains a key issue in many parts of the country, the shift in the mood-music on prices is a concern with even London expectations pointing to a reversal of course both over the coming months and looking further out.

“This highlights the critical importance of the government addressing the challenge around housing supply particularly with the gradual phasing out of the Help to Buy incentive.”